The market is tired. Not only is it finding it tough to forge ahead, some disturbing signs are cropping up. For one, its performance is below par compared to global markets yet again, a feature we saw through the start of 2007. India had started to play catch up but in the last few sessions the underperformance is visible again. Yesterday, China, Hong Kong, Korea all closed 2 per cent up, we lost half a per cent. Last Friday we had seen something similar. The Sensex never quite made it to its all time high and now seems to be drifting even as its peers climb to higher peaks. This is disturbing. It suggests that the strength in global markets is just about protecting us from a sharp crack. If, however, global markets were to go soft, we may slip fast.
The daily pattern of trade is also worrying. On good days for global markets we start strong with a gap and then inevitably slip into the red during the second half of the session. Even small rallies are not holding. The upmoves are getting more and more shortlived and sold into. The index trading ranges are getting narrower and drifting down slowly. Market breadth is a concern. The momentum that midcaps exhibited in April and May just is not there. While a handful of stocks perform everyday the performance is hardly secular. HNIs and traders seem to be lacking conviction again. The primary market is surely not helping by milking away away a lot of money from the margin. Mutual funds which are sitting on a large amount of cash don't seem to be in tearing hurry to buy in just now.
Objectively speaking, the signs are not great. However, as all of us know, sentiment is a fickle thing. Two good rallies and it may all turn around; so to take a conclusive bearish stance may not be prudent. However, till the market shakes off this fatigue it may not be wise to take big long bets either. The screen is not transmitting very bullish signals. Tough to say where the market will be by the time big IPO season ends and earnings season starts in three weeks.
The writer is Executive Editor, CNBC-TV 18